0001628908-26-000015
SEC filingRevenue fell 27% due to Performance Suite restructuring, while goodwill impairment of $398M drove operating loss; MER improved but remains elevated.
Evolent Health, Inc. describes itself as a market leader in connecting care for people with complex conditions such as cancer, cardiovascular disease, and musculoskeletal diagnoses. The company works on behalf of health plans and risk-bearing entities to support physicians and providers in delivering evidence-based care. Evolent was founded in 2011 by members of its management team, UPMC, and The Advisory Board Company, and has grown both organically and through acquisitions, notably New Century Health in 2018.
The company operates as a single operating and reportable segment. The chief operating decision maker (CODM), the CEO, assesses performance and allocates resources on a consolidated basis. Therefore, no separate segment financial information is provided. The majority of revenues come from the Specialty Care Management Services solution, which includes capitation and non-capitation arrangements, while additional administrative services (e.g., health plan services, pharmacy benefit management) contribute to revenue.
Evolent’s key proprietary platforms are CarePro™ (a custom specialty care management workflow platform providing clinical decision support) and Identifi® (an integrated value-based care platform that aggregates data, manages care workflows, and engages patients). The company also uses an AI tool called Auth Intelligence to aid in prior authorization review by identifying relevant information, but human reviewers make all final decisions and it is company policy not to use AI to deny care.
Evolent markets and sells its services directly to payers and providers throughout the United States. The sales team works closely with leadership and subject matter experts to foster long-term partnerships. Contracts are typically multi-year with monthly payment terms based on per-member-per-month fees, and some include risk-sharing or performance-based incentives. Customer concentration is not specifically disclosed; however, the company notes that contracts may be terminated with cause or convenience and may include exclusivity provisions.
The market for Evolent’s solutions is fragmented and competitive, ranging from smaller niche companies to large, well-financed, technologically-sophisticated entities. Key competitive factors include breadth and quality of offerings, ability to deliver clinical and financial improvement, brand recognition, ease of integration, and price. The company faces pricing pressure, and consolidation among competitors or customers could increase competition. Notable dynamics include some customers choosing to in-source services, and the incorporation of AI and machine learning by competitors.
Evolent’s growth strategy is built on multiple avenues: (1) growing with existing partners through increased membership, cross-selling, and capturing value via risk-sharing arrangements; (2) capturing a larger portion of medical expense dollars through performance-based relationships; (3) expanding offerings to meet evolving market needs, such as new specialties (kidney care, fetal-maternal medicine) and enhanced pharmacy management; and (4) selectively pursuing strategic acquisitions, investments, and divestitures to broaden capabilities or dispose of non-core assets.
As of February 16, 2026, Evolent employed approximately 4,200 people globally, none of whom are represented by a labor union. The company emphasizes talent attraction, competitive compensation, employee development through resources like LinkedIn Learning, and well-being initiatives including medical benefits, paid time off, parental leave, and mental health support. Evolent also promotes an inclusive culture and conducts employee listening surveys.
Revenue for 2025 decreased 26.6% to $1,876.2 million from $2,554.7 million in 2024, primarily driven by contractual updates in the Performance Suite. The largest impacts were a $447.3 million reduction from transitioning a customer to Specialty Technology and Services Suite (STSS) and $267.4 million from scope narrowing, partially offset by $62.9 million growth in other Performance Suite and STSS contracts. Gross profit improved to $399.9 million (21.3% margin) from $367.4 million (14.4% margin), reflecting a favorable mix shift toward higher-margin product types. Operating loss widened dramatically to $410.1 million from $40.5 million, primarily due to a $398.0 million non-cash goodwill impairment charge. Net loss attributable to common shareholders increased to $579.4 million from $93.5 million, driven by the impairment and higher interest expense.
Cost of revenue decreased 32.5% to $1,476.3 million, with claims costs down $715.7 million due to the revenue declines. Selling, general and administrative expenses rose 15.5% to $303.9 million, reflecting higher personnel costs, professional fees, and technology spending. Depreciation and amortization declined slightly to $115.9 million.
The Performance Suite, which includes capitation arrangements, saw revenue fall 37.4% to $1.13 billion, as the business shifted toward lower-risk models. STSS grew 4.4% to $353.2 million, benefiting from the customer transition. Administrative Services declined 4.8% to $226.7 million, and Cases (surgery management and advanced care planning) decreased 4.3% to $169.0 million. Medical Expense Ratio (MER) for the Performance Suite improved to 80.5% from 82.3%, and excluding the disposed Evolent Care Partners business, MER improved to 89.0% from 96.0%, indicating better medical cost management.
Management highlighted ongoing uncertainty from the One Big Beautiful Bill Act (OBBBA), which may reduce Medicaid and ACA Health Exchange membership, and broader industry medical cost trends that could pressure future results. The company expects continued growth in cancer and cardiovascular treatment costs but anticipates offsetting contractual protections and clinical interventions. No formal guidance was provided for 2026. The sale of Evolent Care Partners and restructuring of key customer contracts position the company to focus on specialty care management and technology services. Liquidity remains adequate with $151.9 million cash and $28.8 million restricted cash, though the company has significant debt obligations.
As of December 31, 2025, Evolent Health held $151.9 million in cash and cash equivalents, down from $104.2 million at year-end 2024. Total debt increased to $970.5 million (long-term) from $490.5 million, reflecting the issuance of $166.8 million in 4.50% convertible notes due 2031 and a $175 million second lien term loan, partially offset by repayment of $342.0 million. Shareholders' equity declined to $415.2 million from $1,001.3 million, driven by a $579.4 million net loss and $40.3 million in treasury stock purchases. The company recorded a $398 million goodwill impairment in 2025 after its stock price fell from $23.35 to $6.67 per share between annual tests. No additional impairments on intangible assets were required as undiscounted cash flows exceeded carrying values.
Evolent's commitments primarily consist of letters of credit totaling $14.9 million (collateralized by $15.9 million restricted cash) and surety bonds of $4.9 million. The company has a Tax Receivables Agreement liability of $108.9 million. Operating lease obligations (including termination payments) are $20.1 million, with $15.8 million due within one year. No material purchase commitments (e.g., supply or capacity agreements) were disclosed in the Notes.
In August 2025, Evolent repurchased $40 million of its Class A common stock in privately negotiated transactions. No common dividends were paid; preferred dividends totaled $11.1 million in 2025. Capital expenditures (internal-use software and property/equipment) were $34.1 million, or 1.8% of revenue. Debt activity included the issuance of $166.8 million in 2031 convertible notes, $175 million second lien term loan, and repayment of $342.0 million (including $167.4 million of 2025 notes). The company recorded a $3.5 million loss on debt extinguishment and $15.0 million in fees for extinguishing preferred stock.
Evolent operates as a single reportable segment. Revenue is disaggregated by payer (Medicaid $818.3M, Medicare $464.2M, Commercial $593.7M) and by product (Performance Suite $1,127.3M, Specialty Technology $353.2M, Administrative Services $226.7M, Cases $169.0M). No operating income or margin is provided at the sub-segment level. The company relies on a few large partners: Molina Healthcare (25.7% of revenue), Cook County Health (16.4%), Florida Blue (14.2%), and Centene (12.2%).
Evolent derives 68.5% of revenue from its top four partners: Molina (25.7%), Cook County (16.4%), Florida Blue (14.2%), and Centene (12.2%). The loss, renegotiation, or non-renewal of any of these contracts would materially harm results. Many contracts can be terminated for convenience with notice, and some have performance-based termination clauses. Additionally, partner credit risk is elevated due to payer rate reductions and higher healthcare costs.
The Performance Suite involves risk-sharing where Evolent assumes medical cost responsibility for certain specialties. Oncology costs have outpaced historical averages since mid-2024, adversely impacting 2024 and 2025 profitability. The company also faces difficulty predicting utilization patterns, drug costs, and the impact of new therapies. Rate increases often require partner consent, limiting the ability to adjust for rising costs.
A $398 million goodwill impairment was recorded in 2025 after the stock price declined from $23.35 (Oct 31, 2024) to $6.67 (Oct 31, 2025). Further declines could trigger additional impairments. Total debt stands at $934 million, with floating-rate exposure under the Credit Agreement (SOFR-based). Higher interest rates increase debt service costs. Restrictive covenants limit operational flexibility, including investments and acquisitions.
The Optimizing Benefits for Beneficiaries Act (OBBBA) and potential Medicaid policy shifts (e.g., block grants) could reduce member enrollment and revenue. The elimination of utilization management rules would increase medical costs. The company is also under a DOJ Civil Investigative Demand (August 2025) related to Medicare Advantage diagnosis codes from a former customer (ended 2021). The outcome cannot be estimated.
Accuracy of customer data is critical; in 2024, a surge in late claims submissions hurt financial results. Reliance on third-party vendors for data centers, cloud services, and licensed technology creates single points of failure. The use of AI and machine learning introduces risks related to model accuracy, regulatory compliance, and competitive pressure. Cybersecurity threats are escalating; though no material incident has occurred, costs to defend are rising.
Evolent faces intense competition from larger, better-funded players and consolidation among healthcare customers. The company may need additional financing, which could dilute shareholders. Stock price volatility is expected due to earnings fluctuations, analyst sentiment, and macro factors. Tax receivable agreement obligations could require substantial cash payments in the future.
The provided excerpt from Evolent Health's 10-K does not contain the actual cash flow statement. It includes the auditor's report and notes on goodwill impairment and claims reserves, but the consolidated statements of cash flows are referenced on page 66, which is not included. Therefore, no numerical analysis of cash flows is possible.